Advertisers. Direct mail advertisers send solicitations (junk mail) to thousands of potential customers in the hope that

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Advertisers. Direct mail advertisers send solicitations

(“junk mail”) to thousands of potential customers in the hope that some will buy the company’s product. The response rate is usually quite low. Suppose a company wants to test the response to a new f lyer and sends it to 1000 people randomly selected from their mailing list of over 200,000 people. They get orders from 123 of the recipients.

a) Create a 90% confidence interval for the percentage of people the company contacts who may buy something.

b) Explain what this interval means.

c) Explain what “90% confidence” means.

d) The company must decide whether to now do a mass mailing. The mailing won’t be cost-effective unless it produces at least a 5% return. What does your confidence interval suggest? Explain.

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Business Statistics

ISBN: 9781292269313

4th Global Edition

Authors: Norean Sharpe, Richard De Veaux, Paul Velleman

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